The Finance Minister Lyonpo Wangdi Norbu yesterday presented the government’s budget for the financial year (FY) 2010 and 2011at National Assembly session.
According to the national budget report (FY 2010-2011) the initial approved budget outlay for the FY was Nu. 26,304.310mn. The budget estimate at the end of March 2010 shot to Nu 30,451.645mn an increase of 15.77%. The revised budget includes Nu. 4,147.335mn.
The country’s current expenditure projection is revised upwards to Nu. 13,837.352mn an increase of about 1.8% from the original estimate of Nu. 13,594.134mn. The increase mainly is due to the incorporation of additional project funds of Nu. 243.218mn.
The capital expenditure budget estimate has also been revised upwards to Nu. 17,731.429mn representing about 28% increase from the original capital budget outlay of Nu. 13,827.312mn. The increase is mainly due to the incorporation of additional budget for activities such as the construction of Lhakhangs and cottage for nuns at Wolakha in Punakha, acquisition of land for the green zone areas in Thimphu city and for several donor funded activities amounting to Nu. 3,904.117mn.
The domestic projected revenue is Nu. 15,370.223mn an increase from the original estimate of Nu.14,108.766mn or 8.94%, which is mainly on account of increase in remittances from the Tala hydro-power project due to improved generation during the year.
Funds received from donors incorporated as supplementary budget for the FY 2009-2010 is Nu. 2,076.956mn and 104.323 mn under the Royal government’s funding.
The gross domestic product (GDP) of the country since the last two years grew by 11.9% which shrunk to 6.2% in the FY 2008-2009. The electricity sector continued to be the main driver of the economy. It accounted for over 22% of GDP on average, as compared to 11.5% in the FY 2005-2006 and 18% in the FY 2006-2007.
The share of agriculture conversely has gradually decreased from 21.8% in the FY 2005-2006 to 16.7% in the FY 2008-2009. Another important contributor has been the construction sector which constituted about 12% of the economy.
Tourist arrivals in 2009 is estimated to have dropped by more than 15% as compared to the year earlier.
Gross foreign exchange reserves reached the equivalent of US $ 758 mn as of the end of June 2009 against US $ 655.3mn the previous year recording a growth of US 102.7 mn or 15.7%. As of December 2009, it had reached US $ 818.59 mn, sufficient enough to cover more than 19 months of imports.
A significant portion of the grant is provided by the Government of India (GoI) as in the past. For the FY, the total GoI grants of Nu. 8,068.180mn is presently projected of which the programme grant is Nu. 1,400mn and project grants of Nu. 6,668.180mn.
Besides the grants from GoI, project-tied grants of Nu. 2,331.258mn and programme grants of Nu. 505.700mn is expected from other bilateral and multilateral agencies.
“This year’s budget is also like in the past is geared towards poverty reduction and so the primary focus is on the socio-economic development strategies within a sound macro-economic framework,” the Finance Minister told the House.
Like always the government has accorded high priority to the Health and Education sectors. The sectors combined will receive the highest share of about 23% of the total budget.
The amount allocated in these two sectors is not revealed but going by some of the major areas of expenditure over Nu. 400mn in the Health sector and over Nu. 700mn in the education sector will be incurred during the FY 2010-2011.
Understanding that high quality human capital is a pre-requisite the government has committed Nu.369.93mn as human resource development budget. And to accelerate development in the rural areas the government has allocated Nu.
3,547.599mn towards Renewable Natural Resource for the purpose.
For the trade, Industry and private sector development Nu.109.395mn has been allocated to cover development and maintenance of Industrial sites, revision of Company’s act, feasibility studies for the setting up of new industries.
In the tourism sector to gear up for the planned inflow of 100,000 tourists a year by 2012 the government for the FY 2010-2011 Nu. 203.259mn has been allocated.
The total budget in the road sector is Nu. 3,444.806mn which is about 10% of the total budget, the primary aim being to link all parts of the country internally.
The government’s one of the main focuses being on the Information and Communication Technology (ICT) Nu. 1,061.3mn and an additional Nu. 193.969mn as a provision for the development of various airports and their operation has been allocated.
A budget of Nu. 2,567.658mn is provided for in the Law and Order sector out of which Nu.1,098.669mn is for the improvement of the living conditions and efficiency of the police force.
The Finance Minister’s presentation on the budget will continue this coming Monday.